SEC Document

NOTE K  LEASES

We lease certain property, plant and equipment under long-term operating lease agreements, some of which provide for increased rental payments based upon increases in the
cost-of-living index. The following table illustrates our future minimum lease commitments under all non-cancelable lease agreements, for each of the next five years and in the aggregate, as of May 31, 2017:

May 31,

(In thousands)

2018

$

55,836

2019

43,327

2020

29,873

2021

21,514

2022

16,031

Thereafter

59,610

Total Minimum Lease Commitments

$

226,191

Total rental expense for all operating leases amounted to $61.3 million, $57.5 million and $53.8 million for the fiscal years ended
May 31, 2017, 2016 and 2015, respectively.

NOTE L  PENSION PLANS

We sponsor several pension plans for our employees, including our principal plan (the Retirement Plan), which is a non-contributory defined benefit pension
plan covering substantially all domestic non-union employees. Pension benefits are provided for certain domestic union employees through separate plans. Employees of our foreign subsidiaries receive pension coverage, to the extent deemed
appropriate, through plans that are governed by local statutory requirements.

The Retirement Plan provides benefits that are based upon years of service and average
compensation with accrued benefits vesting after five years. Benefits for union employees are generally based upon years of service, or a combination of years of service and average compensation. Our pension funding policy considers contributions in
an amount on an annual basis that can be deducted for federal income tax purposes, using a different actuarial cost method and different assumptions from those used for financial reporting. For the fiscal year ending May 31, 2018, we expect to
contribute approximately $1.0 million to the retirement plans in the U.S. and approximately $7.0 million to our foreign plans. We elected to accelerate our fiscal 2018 planned contribution to the RPM International Inc. Retirement Plan, and therefore
contributed approximately $52.8 million to the plan in May 2017.

Net periodic pension cost consisted of the following
for the year ended May 31:

U.S. Plans

Non-U.S. Plans

(In thousands)

2017

2016

2015

2017

2016

2015

Service cost

$

37,603

$

32,808

$

30,359

$

4,070

$

4,061

$

4,611

Interest cost

17,323

17,995

20,119

4,614

5,070

7,184

Expected return on plan assets

(25,007

)

(25,749)

(24,308)

(7,109

)

(7,571)

(8,611)

Amortization of:

Prior service cost

217

234

294

(24

)

(2

)

39

Net actuarial losses recognized

22,160

16,759

13,890

2,150

1,739

2,004

Curtailment/settlement (gains) losses

-

87

904

57

Net Pension Cost

$

52,296

$

42,134

$

40,354

$

4,605

$

3,354

$

5,227

The changes in benefit
obligations and plan assets, as well as the funded status of our pension plans at May 31, 2017 and 2016, were as follows:

U.S. Plans

Non-U.S. Plans

(In thousands)

2017

2016

2017

2016

Benefit obligation at beginning of year

$

589,046

$

537,465

$

187,064

$

191,386

Service cost

37,603

32,808

4,070

4,061

Interest cost

17,323

17,995

4,614

5,070

Benefits paid

(28,587)

(26,932)

(4,977)

(7,078)

Participant contributions

933

830

Plan amendments

(196)

(349)

Plan settlements/curtailments

(272)

(4,546)

(630)

Actuarial (gains)/losses

(23,437)

27,982

16,697

1,778

Acquisitions and transfers

Premiums paid

(109)

(121)

Currency exchange rate changes

(7,666)

(7,883)

Benefit Obligation at End of
Year

$

591,948

$

589,046

$

195,884

$

187,064

Fair value of plan assets at beginning of year

$

314,216

$

327,427

$

169,464

$

176,437

Actual return on plan assets

44,924

(21,742)

21,216

1,619

Employer contributions

106,928

35,735

5,753

6,042

Participant contributions

933

830

Benefits paid

(28,587)

(26,932)

(4,977)

(7,078)

Premiums paid

(109)

(121)

Plan settlements/curtailments

(272)

(4,471)

(595)

Currency exchange rate changes

(7,881)

(7,670)

Fair Value of Plan Assets at End
of Year

$

437,481

$

314,216

$

179,928

$

169,464

(Deficit) of plan assets versus benefit obligations at end of year

$

(154,467)

$

(274,830)

$

(15,956)

$

(17,600)

Net Amount Recognized

$

(154,467)

$

(274,830)

$

(15,956)

$

(17,600)

Accumulated Benefit Obligation

$

489,918

$

483,944

$

183,038

$

175,394

54 RPM International Inc. and Subsidiaries

About RPM

RPM International Inc. (NYSE: RPM) owns subsidiaries that are world leaders in coatings, sealants, building materials and related services. From homes to precious landmarks worldwide, their brands are trusted by consumers and professionals alike to protect, improve and beautify. Among its leading consumer brands are Rust-Oleum, DAP and Zinsser.

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